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Simple Voting Games and Cartel Damage Proportioning

Author

Listed:
  • Stefan Napel

    (Department of Economics, University of Bayreuth, 95440 Bayreuth, Germany)

  • Dominik Welter

    (Department of Economics, University of Bayreuth, 95440 Bayreuth, Germany)

Abstract

Individual contributions by infringing firms to the compensation of cartel victims must reflect their “relative responsibility for the harm caused” according to EU legislation. Several studies have argued that the theoretically best way to operationalize this norm is to apply the Shapley value to an equilibrium model of cartel prices. Because calibrating such a model is demanding, legal practitioners prefer workarounds based on market shares. Relative sales, revenues, and profits however fail to reflect causal links between individual behavior and prices. We develop a pragmatic alternative: use simple voting games to describe which cartel configurations can(not) cause significant price increases in an approximate, dichotomous way; then compute the Shapley-Shubik index. Simulations for a variety of market scenarios document that this captures relative responsibility better than market share heuristics can.

Suggested Citation

  • Stefan Napel & Dominik Welter, 2021. "Simple Voting Games and Cartel Damage Proportioning," Games, MDPI, vol. 12(4), pages 1-18, October.
    • Handle: RePEc:gam:jgames:v:12:y:2021:i:4:p:74-:d:648536
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    References listed on IDEAS

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    Cited by:

    1. Görlach, Joseph-Simon & Motz, Nicolas, 2024. "A General Measure of Bargaining Power for Non-Cooperative Games," CEPR Discussion Papers 18843, Centre for Economic Policy Research.
    2. Marc Deschamps & Dongshuang Hou & Aymeric Lardon & Christian Trudeau, 2026. "On the Snowballing Welfare Effects of Cartels and the Allocation of Fines," Working Papers 2601, University of Windsor, Department of Economics.
    3. Napel, Stefan & Welter, Dominik, 2023. "Umbrella pricing and cartel size," International Journal of Industrial Organization, Elsevier, vol. 91(C).

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